What might an ageing workforce mean for workplace performance?

In yesterday’s blog post we discussed findings from our research on older workers and the workplace. Our focus was on the experiences of older workers, but today we consider the employer perspective. The fact that older individuals are remaining in work is good news for the individuals concerned, since working is associated with higher incomes and better health.  It is also good for the Exchequer, increasing the tax take.  But is it good for employers? To date there has been no robust nationwide evidence addressing this question for Britain.  There are well-known case studies of employers, such as B&Q, who recognise the benefits of older workers, rating their reliability, skills and experience – particularly those with an accumulated knowledge of their industry or firm. But negative stereotypes of older workers still persist, and some employers can be wary when it comes to recruiting older workers. These negative stereotypes often relate to a perception of older workers as perhaps more prone to absence, less motivated or less up to speed with new technology compared with their younger counterparts. The Fuller Working Lives: A Partnership Approach strategy, published by the Department for Work and Pensions yesterday, highlighted the key role for employers in supporting older workers to remain in and return to employment.

Evidence from other countries on the relationship between the age composition of the workforce and workplace or organisation performance is fairly mixed. Studies have been conducted in a range of settings and countries, using various definitions of performance and measures of “older workers”, so it’s perhaps not surprising to find that the picture is not clear-cut.

In research undertaken by NIESR and UCL for the Department for Work and Pensions, we use data from the Workplace Employment Relations Survey (WERS), a nationally representative survey of British workplaces and employees, to explore this issue. To our knowledge, our analysis is the first to investigate this relationship using nationally representative data for Britain. Focusing on the private sector, we investigate whether changes in the proportion of older workers employed at a workplace are associated with changes in workplace performance. Our measures of older workers are based on the proportion of workers aged 50 and above.  Our measures of workplace performance are based on the workplace manager’s subjective assessment of workplace labour productivity, quality of product or service and financial performance, as well as measures of quit rates and absence.

Overall, we find the changing age composition of private sector workplaces does not have a sizeable role to play in explaining their performance. Across a range of estimates we found no significant association between changes in the proportion of older workers employed and changes in workplace performance. We do find some evidence that workplace labour productivity falls where the proportion of workers aged 22-49 falls, either due to a rise in the proportion of older or younger workers. But this association does not carry through to financial performance, which is the bottom line for employers.

Although we can be confident that there is little association between older workers and performance in our study, it is important to be cautious when interpreting the results.  For instance, we cannot be sure what the causal impact of an increase in older workers may be on workplaces because our study cannot account for the possibility that employers choose their workforce age composition in the knowledge of what is best for them.  These and other caveats are discussed in the research report. But, overall, the findings suggest employers should not be overly concerned that an ageing workforce will impact negatively on the performance of their workplace.  Nevertheless, the findings are not grounds for complacency either – there are no doubt challenges, and opportunities, ahead for employers in thinking about how best to harness the skills and experience of this growing workforce demographic.

This blog post is based on research undertaken for the Department for Work and Pensions by Lucy Stokes, Alex Bryson, Helen Bewley and John Forth. The full research report is available here.